Morrisons has launched its sixth wave of price reductions in response to the threat of losing customers to Aldi and Lidl. In an effort to stay competitive, the supermarket chain has slashed prices on 47 high-demand products including mince, tomatoes, butter, squash, cereal, and popular picnic items like pitta breads and scotch eggs. This move marks a substantial £26 million investment in lowering prices, with an average reduction of approximately 25%. For example, a pack of four scotch eggs has been reduced from £2.75 to £2.10, and a 400g pack of honey roast ham has dropped from £3.49 to £2.75.
These price cuts come at a pivotal time for Morrisons as it aims to regain lost market share. Kantar reports a decline in Morrisons’ market share, from 10% earlier this year to 8.7% currently. Last year, Aldi surpassed Morrisons as the UK’s fourth-largest supermarket, and there is now a possibility that Lidl could soon overtake it as well. Over the past year, Lidl’s market share has grown rapidly, rising from 6.2% to 7.7%.
To entice customers back, Morrisons CEO David Potts promised “deflation dividends” this year as ingredient costs begin to decrease. These latest price cuts will be in effect for a minimum of eight weeks, providing customers with more value during the ongoing cost of living crisis.
It is worth noting that earlier this month, there were reports that Morrisons quietly raised the prices of some items included in the first round of reductions in January, resulting in them being more expensive than their original prices.
Rachel Eyre, Morrisons’ Chief Customer and Marketing Officer, stated that the latest price cuts include picnic items to enhance customers’ enjoyment of the warm weather, while also ensuring that essential fridge and cupboard items are affordable.
Morrisons faces the challenge of lowering prices while managing a significant debt of £5.9 billion from its 2021 takeover by private equity firm Clayton, Dubilier & Rice. Rising interest rates make servicing this debt even more burdensome. To counteract this, the supermarket chain has embarked on a cost-cutting initiative, aiming to save approximately £700 million through a reduction in its product range and streamlining its delivery routes to minimize fuel usage.
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